U.S. Factory Activity Holds at Weak Level as Fed Rates Still Weigh — ISM

By Ed Frankl

U.S. manufacturing activity contracted for a sixth straight month in September, as demand remains weak and companies shy away from investments due to high interest rates.

The Institute for Supply Management said Tuesday that its purchasing managers' index of manufacturing activity was 47.2 in September, the same as in August, and a little below the 47.5 expected by economists polled by The Wall Street Journal.

A reading below 50 percent indicates that it is generally contracting.

The survey's index for new orders remained in contractionary territory, while the production index rose, but still remained negative. The gauge of employment also indicated weaker hiring.

However, ISM's manufacturing prices index was in a decreasing mode for the first time this year in September, coming just after the Federal Reserve cut interest rates by half a point.

Still, monetary policy has meant demand remains subdued, as companies showed an unwillingness to invest in capital and inventory, as well as because of uncertainty ahead of November's presidential election, said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee.

"The fourth quarter is slower than anticipated. We won't realize the effect of interest rate adjustments with new project starts until the first quarter of 2025," said one respondent to the survey from the fabricated metal products sector.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

October 01, 2024 10:47 ET (14:47 GMT)

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